Analysis of A-share Market Deviation Amid Weak Chinese Consumption Data

According to the latest November economic data, China’s consumption sector showed obvious weakness:

• Total Retail Sales of Consumer Goods
  : November YoY growth was only 1.3%, hitting the lowest monthly growth rate since 2023[1]
• Industrial Value Added Above Designated Size
  : YoY growth of 4.8%, the lowest since August 2024
• Auto Consumption
  : YoY decline of 8.3%, indicating insufficient demand for bulk consumption
• High-end Consumption Under Pressure
  : Alcohol and tobacco category fell 3.4% YoY, the largest drop this year
• Real Estate-related Consumption
  : Construction and decoration materials fell 17.0%, furniture fell 3.8%, household appliances and audio-visual equipment fell 19.4%

As seen from the chart, the A-share market still showed some resilience amid weak consumption data; although it fell by 4.44% during the period, compared to the deep adjustment of the real economy, the stock market was relatively resilient. Trading volume maintained an average level of 142.64 trillion yuan, indicating that the market still has activity.

The relative strength of the current A-share market mainly relies on the following policy supports:

1. Monetary Policy Easing Expectations
   : The central bank continues to inject liquidity through tools like MLF and reverse repos; the market still expects further RRR cuts and interest rate reductions[2]

2. Fiscal Policy加码
   : The government continues to promote infrastructure investment and industrial policies to provide bottom support for the economy

3. Capital Market Reform
   : Measures like registration system reform and delisting system improvement enhance the market’s long-term attractiveness

Market expectations mainly come from:

• Spring躁动预期
  : Historical data shows that A-shares often perform well at the beginning of the year, and investors layout the cross-year market in advance
• Valuation Repair Space
  : After previous adjustments, A-share valuations are in a relatively reasonable range
• Foreign Capital Inflow Expectations
  : The expectation of Sino-US relations easing may bring foreign capital backflow

• Policy intensity still has room to increase
• Liquidity environment is relatively loose
• Market sentiment repair takes time

• If consumption data continues to deteriorate, it will drag down corporate profits
• External environment uncertainty still exists
• Market confidence recovery needs fundamental support

With the diminishing policy effect and the increasing importance of fundamental data, the support单纯依靠 policy expectations will face tests. If there is no substantial improvement in the consumption side, the market correction pressure will increase.

In the long run, stock market trends must return to fundamentals. Current policy support and expectation-driven cannot permanently deviate from real economic performance.

• Necessities
  : Food and beverage, medicine and biology and other anti-cyclical industries
• Public Utilities
  : Power, water and other industries with stable cash flow
• Financial Sector
  : Banks, insurance and other sectors with low valuations and stable dividends

• Gold-related
  : Safe-haven demand when geopolitical risks intensify
• High Dividend Rate Stocks
  : Provide stable cash income

• New Energy Industry Chain
  : Benefit from the continuous promotion of the “Dual Carbon” policy
• Digital Economy
  : 5G, artificial intelligence and other new infrastructure investment directions
• Domestic Substitution
  : Semiconductors, high-end manufacturing and other independent and controllable fields

• Health Consumption
  : Medical services, health products and other rigid demand areas
• Silver Economy
  : Medical, elderly care industries under the aging trend
• Education Consumption
  : Vocational training, online education, etc.

• Before the fundamentals improve significantly, it is recommended to control the overall position at 60-70%
• Keep cash reserves and wait for better加仓 opportunities

• Avoid over-concentration in a single industry or theme
• Appropriate allocation of bonds, money funds and other low-risk assets

• Set a reasonable stop loss level to control the single loss range
• Pay close attention to trading volume changes and be alert to liquidity risks

The current deviation between the A-share market and the real economy may continue in the short term, but its sustainability is limited. Investors need to clearly recognize the market characteristics of “policy support, expectation-driven”, and adopt a balanced strategy combining offense and defense:

1. Short-term
   : Can moderately participate in structural opportunities in policy beneficiary sectors, but need to control risks
2. Medium-term
   : Focus on consumption data improvement signals and adjust position structure in time
3. Long-term
   : Return to fundamental analysis and select high-quality companies with core competitiveness

• MoM change trend of retail sales data
• Sales data of bulk consumption like automobiles
• Central bank monetary policy adjustment signals
• Changes in foreign capital flow

Against the background of continued weak consumption data, investors need to remain cautiously optimistic, grasp the opportunities brought by policies, and also guard against fundamental risks to move forward steadily in volatility.

[0] Gilin API Data
[1] CNBC - “China’s retail sales growth sharply misses estimates in November, deepening consumption worries” (https://www.cnbc.com/2025/12/15/chinas-november-retail-sales-industrial-production-fixed-asset-investment.html)
[2] Yahoo Finance - “Inflation accelerates? US December composite PMI remains in expansion; cost pressures rise” (https://hk.finance.yahoo.com/news/成長踩煞車-通膨踩油門-美12月綜合pmi續守擴張-成本壓力升溫-160004883.html)